"Our markets have posted all time highs last week, and closed at all time highs on 02.11.2007; and in the absence of any news flow, moving sideways since this monday(05.11.2007) following global cues. The irrational exhuberance noticed in Reliance group small price stocks like RNRL and Reliance petroleum, has met with spead breaker yesterday, as though the business models are exciting for both companies, the delivery of returns is yet to be seen in terms of performance. While RNRL has a dispute to settle with RIL on gas purchase formula and Reliance Petroleum is yet to be commissioned and commence commercial production. Banning of fresh ODI by unregistered FIIs and their subaccounts, has put a halt on capital flows since 26.10.2007. However, our markets did not crash, due to the strength and support from DIIs and retail, who are maturing to enter on dips, a head of "Diwali" an auspicious occasion for most of the Indians, as New year begins, where accounts are opened.
Nifty futures have closed at 16 points premium, after huge volatile session, which was an 'outside day' and nifty spot closed below 5DSMA 5867, while Sensex 5DSMA stands at 19706. Today, is "Dhan Therus" where sentimentally every indian makes purchases, which is supposed to be auspicious, and with support from strong global cues from US markets which closed with substantial gains, our markets shall open with a gap up and should clear the above levels initially, and might march a head to challenge previous strong resistance levels, 5976 (Nifty) & 20033 (Sensex) in the process, on heavy short covering, as yesterday's fall was a bull trap, in our view. Accumulate FMCG majors HUL and ITC which have found stability in these volatile times, for long term appreciation.
Strategy for the Day: Buy 5700 calls in the opening trade and 6000 puts on rallies for quick returns, for this week.
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